President Donald Trump's decision to stop payments made under the Affordable Care Act that help eligible Americans cover their out-of-pocket costs for prescription drugs and doctor visits was met with public pushback and at least one multiparty lawsuit, with the threat of others to follow. The move sent shares of managed care companies with high participation on the state exchanges tumbling.
In an immediate reaction to the president's move, the Oregon Department of Consumer and Business Services ordered health insurers offering plans on HealthCare.gov to increase their already approved silver metal tier 2018 plan rates by 7.1%. The increase will affect plans both on and off the federal exchange, and will compensate for the $49 million worth of ACA cost-sharing reduction payments that the federal government will not be making to Oregon insurers in 2018, the regulator said.
And while major insurers expected the Trump administration to discontinue to ACA payments, they still plan to continue their ACA participation in 2017 and 2018 since a pullback from exchanges before the end of 2017 could be difficult, The Wall Street Journal reported. Some ACA health insurers including Centene Corp., Health Care Service Corp. a Mutual Legal Reserve Co., Florida Blue, Molina Healthcare Inc. and Medica had been preparing for the loss of federal money by seeking rate hikes. But others, like Montana Health Cooperative, which reportedly cannot refile its 2018 rates to factor in the loss of ACA payments, may potentially see steep losses. Centene, Anthem and Molina, which have substantial ACA exchange footprints in 2017, are potentially exposed to immediate losses, Mizuho Securities analyst Sheryl Skolnick said in a research note, the Journal reported.
And after Trump's decision to end the payments, all eyes are on a bipartisan deal on healthcare by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., that could be unveiled within days, another Journal report notes.
Catastrophe losses driven by hurricanes Harvey, Irma and Maria are expected to have impacted earnings for almost all the largest property-and-casualty and multiline insurers during the third quarter. Of the largest public P&C and multiline insurers, only two companies are projected to post higher earnings per share compared with the year-ago quarter, according to an S&P Global Market Intelligence analysis.
Risk modeling and analytics firm Risk Management Solutions expects insured losses of billions of dollars from the wildfires in California, The Insurance Insider reported. Economic losses from the deadly fires are expected to be between $3 billion and $6 billion. Top property insurers in California, including Farmers Insurance, State Farm, Liberty, Allstate Corp., Travelers Cos. Inc., Nationwide Mutual, Chubb Ltd., American International Group Inc., Tokio Marine, National General, Allianz and QBE, are likely to share the bulk of the losses from the wildfires, Artemis noted.
And, U.S. insured losses associated with wind and coastal flooding from Hurricane Nate are unlikely to exceed $500 million, according to RMS.
The U.S. Department of Justice dropped its lawsuit against UnitedHealth Group Inc. over inflated Medicare payments after a federal judge recently dismissed the suit, giving former the option to amend its complaint by Oct. 13, Reuters reported.
MBIA Inc. unit National Public Finance Guarantee Corp., and Assured Guaranty Ltd. units Assured Guaranty Municipal Corp. and Assured Guaranty Corp. have voluntarily withdrawn without prejudice an adversary complaint, which sought to compel the Puerto Rico Electric Power Authority to deposit revenues with the bond trustee as required by the terms of the PREPA Trust Agreement; the Puerto Rico Oversight, Management, and Economic Stability Act; and the U.S. Constitution.
S&P Global Ratings revised its projections for reinsurance pricing at the upcoming Jan. 1, 2018, renewals and now forecasts a rate increase of 0% to 5% in global pricing. Prior to the recent catastrophic events, S&P expected a 0% to 5% rate decline into 2018. S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
In deal news, BP Marsh & Partners PLC, a venture capital provider, acquired a 30% equity stake in U.S. specialty insurance broker Mark Edward Partners LLC for an undisclosed sum. Mark Edward Partners was founded in 2010 by President and CEO Mark Freitas.
Brown & Brown Inc. unit Pacific Resources Benefit Advisors LLC acquired substantially all of the assets of Universal Benefit Solutions LLC.
Post-Tropical Cyclone Ophelia had maximum sustained winds of nearly 85 miles per hour but is expected to weaken in the next couple of days and could dissipate near western Norway by Tuesday night, according to a public advisory issued by the National Hurricane Center at 11 p.m. AT on Oct. 15.
Behind the US opioid epidemic's revolving door; backlash on ending ACA subsidy: A news investigation revealed that former Drug Enforcement Administration agents and lawyers had left to work for the pharmaceutical industry; and President Donald Trump's decision to stop cost-sharing reduction payments was met with a lawsuit.
Financial news in other parts of the world
Asia-Pacific: HK drops suit against UBS, StanChart; Australia to conduct banking stress test
Europe: Aldermore in M&A talks with FirstRand; Austria set to have new chancellor
Middle East & Africa: FirstRand tables £1.08B offer for Aldermore; foreign banks eye Saudi expansion
The day ahead
Early morning futures indicators pointed to a higher opening for the U.S. market.
In Asia, the Hang Seng was up 0.76% to 28692.80. The Nikkei 225 added 0.47% to 21,255.56.
In Europe as of midday, the FTSE 100 was up 0.06% to 7,540.06, and the Euronext 100 was up 0.06% to 1,048.84.
On the macro front
The Empire State manufacturing survey and the Treasury budget report are due out today.